Anali Corporation Has Determined That Its Drilling Equipment Is Impaired

question 75

Multiple Choice

Anali Corporation has determined that its drilling equipment is impaired. The cost of the equipment is $210,000. Accumulated depreciation recorded to date is $140,000. Anali has determined, that based on market data, the recoverable amount will be $45,000. Determine the amount of the impairment loss that Anali will be required to record.

• A) $25,000
• B) $70,000
• C) $45,000
• D) $210,000

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Definitions:

Optimal Average Cash Balance

The ideal amount of cash that a company should hold to minimize costs associated with holding too much or too little cash.

Disbursements

Payments made by a business, usually consisting of expenses, investments, and other financial outlays.

Lower Cash Balance Limit

The minimum amount of cash that a business aims to maintain in its cash reserves to meet emergency or operational needs.

Miller-Orr Model

The Miller-Orr Model is a financial model used to manage cash flow and determine the optimal balance between holding cash versus short-term investments.